Lecture_06_S22009 - The University of Sydney ACCT3014 Auditing and Assurance Semester 2 2009 Week 6 Lecture Auditors Procedures in Response to

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The University of Sydney ACCT3014 - Auditing and Assurance Semester 2, 2009 Week 6 Lecture c Auditor’s Procedures in Response to Assessed Risks c Audit Materiality Additional Optional Reading : ICAA Audit Manual, pp. 198-204; 208-220; 229-230; 250-276 and 299-307
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1. Pre-engagement activities 1.1 Accept / reject new client 1.2 Established terms of engagement 1.3 Engagement letter 2. Planning activities ASA 300 2.1 Obtain knowledge of the business 2.1.1 Preliminary analytical procedures 2.2 Appraisal of risks, including fraud risk going concern 2.3 Estimate of materiality ASA 320 2.4 Review of control components 2.4.1 Preliminary evaluation of control environment 2.5 Develop overall audit plan (i.e. develop an audit strategy) in response to risks – ASA 330 2.5.1 Determine reliance on internal controls – ASA 330 2.5.2 Determine extent and nature of testing – ASA 330 2.5.3 Write audit plan 2.6 Assignment of staff 3. Audit evidence ASA 500 3.1 Tests of control ASA 500 3.1.1 Conducts tests 3.1.2 Make final evaluation of internal control 3.1.3 Modify audit approach ASA 330 3.2 Substantive testing activities – ASA 500 3.2.1 Conduct substantive tests of transactions and balances 3.2.2 Conduct substantive analytical procedures - ASA 520 3.2.3 Evaluate results of substantive procedures 3.2.4 Modify audit approach ASA 330 3.3 Obtain representations 3.3.1 Management 3.3.2 Solicitors 3.3.3 Bank 4. Opinion formulation and reporting activities 4.1 Review financial report 4.5 Related party transactions 4.2 Review audit results 4.6 Formulate audit opinion 4.3 Subsequent events 4.7 Draft issue reports 4.4 Fraud and error 5. Continuous activities 5.1 Supervise conduct of examinations 5.2 Review work of assistants 5.3 Consider appropriateness of continuing relationship with client 5.4 Make required special communication 5.4.1 Material weaknesses of internal accounting control 5.4.2 Material errors or irregularities 5.5 Consult with appropriate persons in connection with special problems 5.6 Document work performed, findings, and conclusions in appropriate working papers 5.7 Consider going concern A U D I T P R O C E S S
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3 DETERMINE RESIDUAL AUDIT RISK RESPOND TO AUDIT RISK ASSESS CLIENT CONTROLS UNDERSTAND THE BUSINESS ASSESS BUSINESS RISK Including the Likelihood of Fraud (ASA 240) and Non-Compliance with Laws and Regulations (ASA 250) At Financial Statement Level (AR = fn IR.CR.DR per ASA 200) Respond to Audit Risk by Linking Risks to Specific Procedures that Address the Risk at the Account and Assertion Level after Considering Compensating Internal Controls ASA 330 ASA 500 ASA 315 The Audit Process
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ASA 330 – Auditor’s Procedures in Response to Assessed Risks c The auditor shall : determine overall response to address the risk of material misstatement at the financial report level; and design and perform further audit procedures whose nature, timing, and
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This note was uploaded on 11/18/2010 for the course ACCT 3014 taught by Professor - during the Three '09 term at University of Sydney.

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Lecture_06_S22009 - The University of Sydney ACCT3014 Auditing and Assurance Semester 2 2009 Week 6 Lecture Auditors Procedures in Response to

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